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If we look at the consumers choice when they decide to upgrade or not it is more than just the player costs. They look at the cost to buy content. Using Amazon as the price here is what a consumer would pay this holiday (assuming 199 for an HD-DVD player and 299 for a Blu-ray player)
HD-DVD = Movies (300,Mission Impossible 3,Hot Fuzz,Shaun of the dead,blades of glory) plus player = 332.75
Blu-ray = Movies (300,Mission Impossible 3,Superman 3,Pirates of Caribean at Worlds End,Casino Royal) = 426.75
DVD = (300,Mission Impossible 3,Superman 3,Pirates of Caribbean at Worlds End,Casino Royal) + 35.99 player = 121.94
The content needs to be cheaper for the format to be adopted. I find it interesting that Paramount uses the claim that HD-DVD is cheaper to produce but the cost of Blades of Glory on amazon is 27.95 and the DVD is 15.99. What people fail to talk about is what was the price of DVDs when players were under 200. I don't remember paying $27.99 at that time. I do remember paying that price when payers cost more.
We can talk about better picture, but DVD is pretty good (not the best) on an HD-TV. So people may buy the player, but they are likely still buying or just renting the DVD. For me I have already cut down on buying content. I could justify buying the movie, that I was on the boarder, if it was 15.99 or cheaper. At 19.99 I would rent and wait until I could buy a pre-viewed disc. Now I only buy previewed DVDs or Blu-ray movies I really want.
I wonder how many pre-viewed discs have cut into DVD sales.
What are your buying habits? Do you rent more with the cost of HD content?
I am interested knowing what others are doing. Thanks

The reality is the cheaper players will result in more players being sold and that means more software will be sold also.
As players approach the $199 mark they will become a tack on purchases for those who are buying HD TVs since these people will want to showoff their new TVs.

Dan_Ohio: I generally agree with you. I won't buy Blades of Glory on HD because it's just not that appealing to me at that price. If the reviews are good, I may pick it up on SD, but I might just wait and buy it used. It won't be the first time I've done that, either.
On the other hand, I just ordered the Mr. & Mrs. Smith import HD for $40 because it is a movie I want to see in HD.
Cost is a major factor in my purchases and I think it will affect acceptance of HD significantly.

Of course one thing that the original post did not take into account was the economy of scale factor.
As more players are in homes the studios will lower the media price because they know they will sell more units and hit their ROI goals.

I will defiantly pay more for some titles than others. But at this point if you go out and buy a new SD release on release day, you're paying about $19.95. Thats about what I'm paying for HD DVD and Blu-ray on the day they come out anyway. So I'm not really paying anymore to buy HD than I would be spending to buy SD.
Doug

"I'm in great shape, for the shape I'm in."Bob Hope in The Ghostbreakers

Dan taking what you said one step further I don't understand why BR and HD DVD see each other as their biggest threat...You're right its DVD. Take your example 6 months into future. The HD DVD and BR will cost the same (at least the SW will), but the DVD SW will continue to fall. I picked up a couple of 4-5 month old titles at Best Buy the other day for $3.99 each. There isn't much follow up discounting with HD. Instead of ripping apart each other sowing customer confusion, both formats need to be showing how they are better than DVD, and why customers need to make the switch.

Prior to the end of March, I purchased an average of 6-8 standard def DVDs per month. I have close to 600 standard def DVDs. However, since March, the only standard def DVD I've purchased is the Seinfeld Season 8 set.
March is when I added a Toshiba HD-XA2 to my gear. After watching King Kong in glorious HD-DVD I knew there was no way I'd be purchasing any more standard def DVDs. My HD-DVD title collection currently sits at 25. That's an average of 5 per month. And only a couple of those are double-dips (repurchase of what I already have on standard def). I'm pretty much sticking with the promise to myself that I'll only buy new releases (new to any kind of disc) going forward. Sure, I'll double-dip here and there. But, for the most part, I'm happy to watch standard def on my XA2. It does an INCREDIBLE job of upconverting standard def. Beats my Oppo 971.
If the studios want more of my money, they have to release on HD-DVD.
Mark

Well definately.
Of course they'll never drop it, but I dont' think we can phrase the issue as DVD vs. Hi Def content. It's not like Microsoft had the problem of Xbox vs. Xbox 360, because they dropped support for the Xbox.

The only problem with this is that even though DVD revenue is falling a bit, the studios make a large (maybe even the largest portion) of revenue from DVD. Last figure I have shows HD revenue was around 1% of home video revenue for most of the studios (WB may be an exception).

It's very hard to go back to a standard dvd once you get a taste of HD. Even older films like Purple Rain & Goodfellas looked great. I will be more selective in my future HD purchases but I don't see myself buying very many standard disc if any from now on! HD ALL THE WAY BABY!!!

Dan - and if we are assuming player costs will come down to those levels - why are we not also assuming the disc prices will drop as well? Not that I feel it will matter much. You can already get most titles for $19.99 and that was where prices were at this stage of the DVD lifecycle. And, by the way - a year into DVD, I still bought the disc or two that was $27.99 (and not porn or criterion, but regular mass-appeal flicks). I will grant you that Circuit City and Best Buy will have to drop their prices to those levels, but if anyone were to shop on Amazon - they'd think they hit a goldmine.
Also are the current forecasts calling for a $299 Bluray player? I hadn't heard that, but if so - it's exciting. It will keep competition going between the two formats.
Lastly - something has to come down in pricing first. And that's usually the hardware. People can get into the format and only sporatically purchase software (if they believe the discs are too expensive for them). As has been stated numerous times, they have a much better SD-DVD player when they go HD and if they can get one so cheap, they will know the disc prices are sure to drop as well. What makes this transition easier is that fact that HD and Bluray are backwards compatible with SD-DVD. But don't expect the masses to get into either this holiday season - only the next tier of adopter. We're still a good 2 years away from the masses considering this purchase.
Cheers,
Jason

Laserdisc had more than 20 years in the marketplace. I hardly think it was killed. Rather - it ran its cycle. I still have mine and it works wonderfully and we still pop in a laserdisc to enjoy every now and then. I guess mine is a ZOMBIE Laserdisc player? After all, it's returned from the dead according to your statement, right? I guess that's what they meant when they spoke of LaserRot?

I was living in the UK between 1997 and 2002 and during that time I don't remember the price of DVD's changing very much at all. Sure once a large catalog of titles had been released and more places, more main street stores started selling DVD's then you started to see more sales and such but the overall price didn't change much at all. Same with CD's. I started buying CD's in 1984 and the prices, taking all things into consideration haven't changed much to this day. I think if you're waiting for the retail price of HD discs to come down you may have a long wait ahead of you. Sure you will be able to find deals and sales but the MSRP is going to remain pretty much where it is now. Hardware of course is a different story.